Publish the lot

Currently there's a furore over here about the publication on the internet of the membership of the British National Party. Some of them look like scrubbed-up thugs, it's true, but I can't see them ever being anything but a cranky and resentful minority. However, if you are a policeman and hold officially-unapproved views, you will lose your job; and there are others for whom this cyber-unmasking will prove a permanent block in their careers.

But if we really want to set the cat among the pigeons, let's make public all political party membership, past and present. Then let's correlate the information with employment. For I recall reading in the 70s that it was pretty much career suicide for teachers in some London boroughs not to be members of the Labour Party, and I suspect the same issue would apply in other areas and other lines of work. And how about mapping the complex network of personal and employment-related relationships, as was done so damningly for Macmillan's government?

And who was in the International Marxist Group and other left-wing, semi-secret societies? The present Minister for "Justice", Jack Straw, has, I understand, called for and either weeded or destroyed the file on himself years ago, a luxury not afforded to many of us. And who went to those annually-advertised Marxist "summer schools" and carefully didn't join a political party, or let their membership lapse to maintain radio silence in their future missions?

Maybe we'll see where the real danger lies.

Moral hazard and white-collar crime

I've said several times that I think a benchmark punishment for those financiers who have very nearly destroyed us with, if not criminal intent, then culpable ignorance, should be the repayment of their last 5 years' bonuses.

Harsh, one may think; unreasonable. Surely this would bankrupt many and leave them homeless.

Well, what is happening now to thousands of the victims of their greedy schemes across America and Britain? Men seeing the disappointment and cooling affection in their women's eyes, feeling the ardour of embraces replaced by demoralising reassurance, knowing that after the comfort comes recrimination; women worrying about their men's fidelity and sobriety, about their own security and the safety of their children; education disrupted, futures blighted.

A long-running motif in public affairs here and presumably across the Atlantic has been "getting away with it". You will all have your own list of those who have been rewarded for misbehaviour. Without fitting retribution, society will continue to crumble. This is not about vengeance, but about making whole.

The reality goggles are smeared

This project of mine is echoed by Eric Janszen of iTulip. His graph and red line suggests what I've been saying recently, that the Dow's trend (if it has one) could be to 6,000 points, with an overshoot to 4,000.

My independently-researched version:

iTulip's:

It's really hard to see the past in our own terms. I'm trying to do it using the Consumer Price Index, which opens another can of worms about the composition and weighting of that index, especially since (I understand) it affects government statistics and benefits. However, you have to start somewhere.

The first thing to note is how freakish recent years have been. If you connect previous start-of-month highs (August 1929, January 1966) and extended the line, you'd expect the recent Dow highs of 1999 and 2007 to be no more than 10,000 points.

And as for the lows: the drop from 1929 to 1932 was 86% "in real terms"; from 1966 to 1982, 73%; and so far since 1999, 46% - but this last from an amazing historical high. And the 350%-plus American debt-to-GDP ratio is quite unprecedented.

So the history of the last 80 years offers no clear guide as to what could happen next. If proportionately as severe as 1932, the Dow could dive to about 2,100 points; if like 1982, just below 4,000. BUT the second of these great waves crashed rather less than the first, so maybe the third will be even more merciful, perhaps a top-to-bottom fall of only 60%, i.e. end up at c. 5,900.

I note that the Dow has closed tonight at 7,552.29. What a fast fall we've seen - will it spring back sharply and then recommence its decline, as in previous cycles, or is it popping like a balloon?

Methodology

I've noted the Dow as it stood on the first trading day each month, starting October 1928 and ending November 2008 (plus where it stood yesterday - 7.997.28 - since we've seen a further steep fall). Then I've noted the historical CPI as at the end of the previous month in each case. Then, looking at the latest Dow figure, I've adjusted historical Dow figures accordingly (i.e. Dow then/CPI then, times CPI now).

Sources: Dow: Yahoo! Finance; CPI: InflationData.com

UPDATE

iTulip today also reproduces its graph on holdings at the Federal Reserve bank, underscoring the point that the current crisis has features that we can scarcely compare to anything in the last 80 years. Except that it's unlikely to be good news.

America to default on its debts?

Michael Panzner introduces the topic with an entry from the Economist blog - and look at the comments.

The Gadarene Swine

In a visit to old haunts, ex-Wall Street trader Michael Lewis (author of "Liar's Poker") describes how greed was turbocharged by ignorance among both the experts and the public, firing them all well beyond the edge of the precipice.

Latest figures on foreign holdings of U.S. Treasuries

The U.S. Treasury statistics issued today list 29 foreign holders of their securities. Between them, the three above account for $110.3 billion of the $110.6 billion increase. What is is to have friends, I suppose.

Not the same as the last Great Depression

How it won't be

A very interesting and credible New Great Depression scenario from Drake Bennett at the Boston Globe, explaining how the grainy images of the 1930s will not be remade and colorized for the 2000s. The same, and not the same.

htp: Michael Panzner - another nugget brought in by the news miner!